KATHMANDU, July 7 The Confederation of Nepalese Industries (CNI) has urged the government to remove the ban on outward direct (ODI) investment, which it says is hindering competent investors from expanding their businesses abroad. In the pre-budget discussion with the Ministry of Finance (MoF) today, CNI said that some Nepali businesses like pharmaceuticals, noodles, banks and finance, insurance and construction, among others are competent sectors and through their expertise can run their businesses smoothly if the government allows them to invest abroad. The government is also positive in this regard. In the programme, Finance Minister Ram Sharan Mahat informed that the government is mulling over allowing outward direct investment by amending the existing Act Restricting Investment Abroad, 1964. “We understand that those who have talent, expertise and capital can generate better revenue through ODI as well, and the forthcoming budget will announce reforms to the related laws,” said Mahat, adding, “We are positive regarding allowing investors to invest a certain amount of capital outside the country in particular sectors.”

Cash incentive for SMEs in the quake-hit areas also sought
Apart from this, CNI sought cash incentive for small and medium enterprises (SMEs) in the earthquake affected areas, as 90 per cent of such industries have suffered damages, with total loss amounting to Rs 115.6 billion. For the recovery of the SMEs, cash incentive is a must, according to CNI. “For recovery of big industries, some portion of corporate tax and value added tax need to be lowered.” CNI has demanded reducing corporate tax by five percentage points or waive dividend tax for at least the next five years. It has also sought the government’s intervention for a stable interest rate from banks and financial institutions for same period. CNI has requested MoF to circulate at least Rs 20 billion in the industrial sector through various means to revive the sector. It also said that though the government has introduced a provision to procure local goods in government offices even if it is up to 15 per cent more expensive than imported items, it has not been implemented. “The government should promote domestic industries. If we aren’t able to do so, there would be a severe risk of deindustrialisation,” said Narendra Kumar Basnyat, president of CNI. Basnyat also said that the government should attract new investment by fixing the benchmark investment amount as incentive for the growth of industrial sector. Contribution of the industrial sector in the country’s economy is around 14 per cent, which has drastically come down in recent years due to lack of government’s intervention to protect domestic industries. Drawing attention to rampant sales of inferior goods and services in the Nepali market, CNI has said that the government should control all these ill practices and ban the products that do not meet the criteria of labelling. Moreover, CNI also demanded time extension of the Tax Settlement Commission, which has settled very low tax amount till date. It has also asked the government to ensure the process of Environmental Impact Assessment and Initial Environmental Evaluation are carried out while setting up new industries or constructing new projects.